APPENDIX 2
Memorandum submitted by the Royal Ulster
Constabulary
Since the partition of Ireland, the existence
of revenue differentials has sustained a lucrative smuggling industry
in the Border areas, the flow of traffic and the type of commodity
involved being dependent on the revenue/supply differentials which
apply at any given time. Those so minded are able to readily exploit
these differentials due to the 300 mile plus land boundary. EU
subsidies/grants for example, in relation to beef, grain and butter,
have also influenced this trade. More recently, the restrictions
placed upon the Northern Ireland beef industry due to BSE, including
the "Over 30 Month Scheme" ["OTMS"], have
similarly encouraged smuggling. Historically therefore, smuggling
has been endemic throughout the 76 year existence of the land
boundary, despite the best efforts of HM Customs and Excise, the
RUC and other relevant agencies, such as DANI. Since 1993 and
the introduction of the "Single European Market", the
absence of any physical restrictions or checks on the border has
simply provided an easier environment for smugglers to maximise
their experience and guile in exploiting revenue differentials.
In the spring of 1998, the RUC became aware
of the widespread importation into Northern Ireland of hydrocarbon
fuels on which no revenue duty has been paid via the land boundary
with the Republic of Ireland. This fuel is then retailed at "makeshift"
sites and, increasingly, at otherwise legitimate service stations.
The latter are operated either by independent
retailers or franchisees of the major oil companies. It is estimated
that the illicit trade in fuel oils accounts for 40 per cent plus
of sales in Northern Ireland. Again, this illicit trade is driven
by the differentials in fuel revenues which exist between the
UK and the Republic of Ireland. Detailed submissions on these
aspects will, no doubt, be made to the Committee by HM Customs
and Excise [HM C&E].
The Committee will be aware that the primary
responsibility for the enforcement of the law in this area rests
with HM C&E. The RUC, however, in recognition of the fact
that HM C&E has limited resources within Northern Ireland,
plus the obvious potential for "terrorist-funding",
has been fully supportive of HM C&E in its operations to date.
Additionally, uniformed police, exercising their powers under
the Custom and Excise Management Act 1979, have on a number of
occasions, independently intercepted and seized suspected illegal
importations of fuel oil.
The level of support which the RUC can provide,
is not, however, without its limitations, due to the heavy demands
placed upon the Force in conventional policing roles. Cognizance
must also be taken of the fact that no other policing area within
the UK has a land boundary, therefore the level of support which
the RUC is called upon to give to HM C&E is without parallel
in British policing. Clearly, with both Agencies having finite
resources which can be directed at this particular problem, there
is a need for an overall strategic plan, which maximises their
operational utility and effectiveness.
Following discussions between both agencies
and representatives of the oil industry, including the Petrol
Retailers Association, it was agreed that any initiative to counter
the smuggling of fuel oils must be intelligence-led. This intelligence
can be gleaned from a variety of sources, including operational
RUC officers, particularly those within Border Sub-Divisions.
Other intelligence is also available to HM C&E and within
the oil and petrol retailing industries. Such intelligence can
form the basis for HM C&E-led operations, supported when necessary,
by the RUC. The RUC's "D" [Operations] Department co-ordinates
such support via the Regional ACC's and local command, particularly
in North and South Regions.
The only area in which the RUC takes the predominant
role is in those cases in which it is believed that the profits
from fuel oil smuggling is used as a main source of funding for
terrorist organisations. It is widely acknowledged that any widespread
smuggling in the Border counties or distribution of smuggled goods
in Nationalist areas is most unlikely to take place without some
benefit deriving to republican terrorist groupings. However, as
the trade in illicit fuel affects large parts of the Province,
intelligence indicates that it is clearly outside the capacity
of any one group to control such an undertaking. Rather, it is
believed that they derive their benefit from licensing or franchising
operations conducted by individuals (who may or may not have terrorist
affiliations). In the few instances where intelligence of this
nature has become available, it has been developed by the RUC
and has resulted in action being taken by the Headquarters Serious
Crime Squad—C1[2].
It must be candidly stated that the smuggling
of whatever commodity across the land boundary is extremely difficult
to police. The history of this type of activity and 30 years of
terrorism have taught us that much. The mischief therefore needs
to be addressed by other means, including effective and punitive
sanctions for those caught involved in this illicit trade. Further,
the high differential which exists in duty levels between the
UK and the Republic of Ireland may require review to be perhaps
placed on a more comparable footing. This of course may not happen,
because perhaps in the overall scheme of things, the losses to
the Exchequer as a result of this illicit trade in Northern Ireland
are much less than the level of duty derived from fuel oils on
a UK basis. HMG nonetheless urgently needs to consider and address
this issue, just as it is doing in respect of the illicit importation
of alcohol into the UK from the Continent. It must also take cognizance
of the damage being inflicted upon the petrol retailing industry
in Northern Ireland. This particular mischief will not be remedied
by an enforcement strategy alone.
HMG must also recognise that offences such as
the evasion of hydrocarbon fuel duties have the potential to release
into the NI economy very substantial sums of money that of necessity
need to be "laundered", as straight bank deposits could
evoke disclosure requirements.
Past investigation has shown that such money
tends to be "invested" in other criminal enterprises
such as contraband/counterfeit goods, drugs, etc or alternatively
in legitimate businesses which are run for further criminal gain
and as outlets for other illegally acquired goods.
22 January 1999
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